Half of SA adults 'unbanked'

By Staff Writer

From Fin24, 11 September 2007

By Michael Hamlyn,
Cape Town

Finance Minister Trevor Manuel told the National Assembly on Tuesday that a 2006 survey showed that almost half the adult population of the country do not have access to banking services. "This implies," he said, "that in 2006 15.27 million of the adult population was unbanked."


In August, Reuters reported that South Africans tend to opt for non-traditional forms of saving. According to Old Mutual, non-traditional savings included owning assets such as property "in good areas" and participating in stokvels.


"There's no doubt that a significant portion [of income] goes towards consumer debt, but what we fail to realise is that the large portion goes toward mortgage debts," the executive director of the Old Mutual Investment Group SA, Derrick Msibi, said.


He said non-traditional savings increased from 13% of total adjusted savings in 1996 to 18% in 2006. Non-traditional savings were beneficial, as key asset prices have boomed over the last four years.
According to Old Mutual SA managing director Paul Hanratty, non-traditional savings in South Africa amounted to around R1trillion.

Parliament was debating the Co-operative Banks bill which was passed without opposition and now goes to the National Council of Provinces for concurrence. 


The minister said that the problem of access to financial services is too large to be tackled by commercial banks alone. "Community participation and some government intervention is required," he said.


He told the house that cooperative banks are not a new concept, but the bill formalises an old tradition of institutionalised self help practices, which have been successful in many other countries.

Since 1998 financial services cooperatives, credit unions and village banks have been operating under an exemption from the mainstream Banks Act.


But the implications of the exemption and a lack of specific legislation are that there is a lack of protection for deposits, and an exclusion from 'lender of last resort' facilities. Accordingly, he said, public confidence in these institutions is compromised.


The bill before the house sought to correct this "sub-optimal and temporary regulatory environment by providing for formal regulation and supervision of the banks and establishing a deposit insurance fund.

Supporting passage of the bill, Douglas Gibson, who speaks on finance for the Democratic Alliance, said that cooperatives have a long and distinguished history in this country - he cited as examples Old Mutual and Sanlam who were owned by their policy holders until the demutualisation process.


"I am hoping that some of the co-operative deposit taking institutions that we are providing for today will grow and develop into mighty South African financial institutions within the next few decades," Gibson said. "No one should underestimate the possibilities for growth of these co- operative banks."

 

Recent Articles

Featured Request your credit report from the right bureau

With so many different credit bureaus in South Africa, it may be difficult to decide from which one to request your credit report. We have a look at what you should be aware of when selecting a credit bureau.

Applying for a home loan? Consider the repo rate

When you apply for a home loan, one of your top priorities should be to secure a low interest rate. In order to achieve this, you need to be familiar with the repo rate. We find out more about this.

Effective financial planning as a single parent

As a single mom or dad, it can be challenging to keep up with the ever-increasing expenses of raising a child. We have a look at the importance of setting up a budget as a single parent.

How your credit score impacts your insurance – and vice versa

Since insurance is paid in advance, it may seem unrelated to your credit score. However, these two are in fact linked to one another. We find out why insurers look at your credit score.

Deals

Get a FREE flight ticket with Hotel Sky

Price: From R5,200
When: Until 31 January 2022
Where: Johannesburg and Cape Town

Voucher for 2 special at Bakwena Day Spa

Price: From R1,798
When: Until 31 January 2022
Where: Centurion, Hartbeespoort and Stellenbosch

Spier Hotel Summer Special

Price: Available on request
When: Until 31 March 2022
Where: Stellenbosch


Latest Guide

Guide to debt rehabilitation solutions